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16 Mar 2015
CBR could lower the rate to 10% in H2 2015 – Danske Bank
FXStreet (Edinburgh) - In light of the recent 100 bp rate cut by the CBR, Economist Vladimir Miklashevsky at Danske Bank, sees the benchmark rate dropping further towards 10% in the second half of 2015.
Key Quotes
“As inflation continued to accelerate in February from 15% y/y in January to 16.7% y/y, and the inflationary pressure has continued since, we see the cut as purely cosmetic, effected mainly due to political pressure”.
“In recent months, critics of the CBR’s aggressive monetary policy to curb inflation and support the rouble have strengthened”.
“We welcome the decision to cut, as last year’s aggressive monetary policy has caused a massive monetary contraction and is likely to send the Russian economy deep into recession this year (we expect GDP to fall -7.9%), with a further -0.8% y/y fall in 2016”.
“As we expect CPI to slow to 11% y/y by the end of 2015, we do not exclude the key rate falling under 10% in H2 15 as the central bank follows through on its new stance”.
Key Quotes
“As inflation continued to accelerate in February from 15% y/y in January to 16.7% y/y, and the inflationary pressure has continued since, we see the cut as purely cosmetic, effected mainly due to political pressure”.
“In recent months, critics of the CBR’s aggressive monetary policy to curb inflation and support the rouble have strengthened”.
“We welcome the decision to cut, as last year’s aggressive monetary policy has caused a massive monetary contraction and is likely to send the Russian economy deep into recession this year (we expect GDP to fall -7.9%), with a further -0.8% y/y fall in 2016”.
“As we expect CPI to slow to 11% y/y by the end of 2015, we do not exclude the key rate falling under 10% in H2 15 as the central bank follows through on its new stance”.